Staffing Firms Offer Much More than Filling Seats

The rise of the temporary workforce is an HR trend that’s here to stay, say a range of economists and labor market experts. Temporary workers make up 19 percent of all new jobs in the U.S., according to the U.S. Bureau of Labor Statistics.

Staffing firms nationwide collectively employ an average of 3 million workers daily across all industries, providing workforce flexibility and access to a large pool of candidates. These workers are a diverse group, made up of people across numerous professions, including administrative workers, accountants, IT technicians, health care staff, marketing specialists, graphic designers, skilled tradesmen, security officers, computer programmers, writers and construction workers.

Staffing firms can play a vital role in any company’s workforce planning approach, and the advantages to HR are numerous when both parties—the staffing agency and the client employer—engage in a shared strategy.

Richard Wahlquist, the president and CEO of the American Staffing Association (ASA), talked with SHRM Online about the benefits of using staffing firms, the keys to an optimal relationship between the client’s HR team and the staffing agency, managing the risks of co-employment, and some of the erroneous negative associations surrounding the use of temporary workers.

SHRM Online: How can HR best use the resources staffing firms provide?

Wahlquist: To begin with, HR needs to understand what it is they’re looking for. Is it a higher degree of workforce flexibility, help in sourcing talent, or for more time and interaction with the C-suite to deal with strategy?

I think we’re in a unique time for HR and for employers generally. Talent has become the most important strategic differentiator in terms of a company’s competitiveness. And we’re seeing employees look at the world of work in a different way. They understand that employment security is no longer tied to working for an individual company. It’s based on their skills and the extent to which those skills are in demand. Talent is more in the driver’s seat today than in perhaps the last couple of decades.

For staffing firms and their HR professional partners, we have to bring our best game. Engaging a staffing professional as a consultant of workforce strategy information—not just saying “I need a person [to fill a certain job]”—is a really smart step to take. Sourcing, screening and deploying talent is the core of the staffing business model, but staffing firms also understand what the best places to work are doing. Staffing firms can help client employers revise and update their job descriptions and compensation policies, and they can work with clients to help develop talent. Companies can also use staffing firms for recruitment process outsourcing, engaging the staffing firm as an adjunct to HR, bringing in an additional level of expertise around recruitment, talent deployment, and striking the optimal balance between permanent and flexible employees.

One of the most disruptive things for a company is to have to lay people off. It’s also very costly. For most companies, talent is their biggest single expense. Understanding that product and business cycles for different industries vary throughout the course of the year, and economic cycles will deliver upturns and downturns over time, finding a strategy to maintain a committed, core group of employees around which to create flexible rings of temporary and contract workers is a wise strategy. Flexible workers—a new breed of employee known as contract professionals—are assigned as the need arises within a given company, and when that need no longer exists, can be redeployed to another company.

SHRM Online: Does that apply to industries across the board?

Wahlquist: Yes, staffing firms source and supply talent and talent solutions across every industry in the United States, and across every occupation. Our members collectively operate in excess of 17,000 offices, in all 50 states. They include hundreds of dynamic, independent companies that may have operations in a specific market or region, but also include all of the leading firms as measured by employee satisfaction and revenue in every one of the staffing verticals: health care; office-clerical and administrative; industrial; professional; and engineering, IT, and scientific. Our members have a very, very deep reservoir of talent upon which HR professionals can tap for assistance.

And for those who might think “Surely, we can’t go to a staffing firm to find nuclear physicists, or emergency room doctors,” they would be wrong. Staffing firms cover every profession across law, medicine, finance, scientific support, through the white-collar professions, the nondegreed professions and through the skilled trades. You’ll be able to find a staffing firm that sources talent across the entire employment continuum.

Historically, the larger the company is, the more likely it is to use staffing solutions on a strategic basis. Virtually all large employers with 1,000 or more employees use staffing strategically for workforce flexibility and access to talent. However, we find there is less utilization at smaller companies that sometimes think it will be too much work to bring in a temporary employee, and train them on the specifics of the task. I think that’s shortsighted. Smaller and midsize companies have to ask themselves, “If this is such a proven strategy for larger organizations, should we at least kick the tires on it?”

SHRM Online: What are some of the critical considerations HR and client companies should discuss with staffing firms before a working relationship begins? What kind of due diligence is necessary?

Wahlquist: First, HR needs to ask about the staffing firm’s expertise. You may be hiring very narrowly for a specific skill set or in a particular occupation. Maybe you’re looking for Java programmers. You would want to find a staffing firm that specializes in that skill set. HR professionals can go to the ASA website, and access staffing firms geographically and by area(s) of specialty. After you’ve identified some firms and you want to know if these are the right ones, there are a number of questions to ask and it should start with a face-to-face consultation. I wouldn’t recommend doing this over the telephone. You’re trying to engage someone to help you develop the people that work for you. You’re going to want to deeply engage with that individual and determine if they are a good fit. HR should ask about the company’s background, ask for success stories—not just in filling seats, but in providing workforce solutions that help companies become more competitive. HR should ask if they can provide references, or offer up case studies of success. Ask whether they are a member of ASA, or other professional societies such as the Society for Human Resource Management, because that indicates a commitment to professionalism, best practices and higher standards of business conduct, and access to real-time information and data on employment trends. You really want someone who is conversant with labor and employment law to ensure that everything is done to protect the individual worker’s rights and insulate companies from unintended or frivolous lawsuits.

SHRM Online: What can HR do to make the relationship with the staffing agency optimal?

Wahlquist: Give the staffing firm enough information, so that they really understand your business, including short-term and long-term strategic goals, the organizational culture and the generational mix. Whether or not you have flexible work polices. Whether or not you’ve ever submitted the company to any external measurements around best places to work. Can you provide client satisfaction surveys, employee satisfaction surveys, turnover metrics and compensation and benefits policies? HR should ask for input on how their business compares to other companies for which the staffing provider is sourcing talent. And, whether you bring on one employee or 100 employees, really put in the time to thinking about an onboarding process that parallels the onboarding provided to your regular employees. Make sure that they’re given the tools to be efficient on the first day, and work to make the workplace welcoming. You don’t want them to call up their staffing firm employer and to complain that the assignment or work environment isn’t a good fit. Really good communication with the temporary workers and the staffing firm is key. And be sure to provide feedback on what to fine-tune to make the next placement a better match and a win-win for the staffing firm and the client company.

SHRM Online: How can host employers and staffing firms best manage the co-employment risk, whether the issue is safety training, worker classification or implementing the Affordable Care Act (ACA)?

Wahlquist: Understand the term co-employment. Don’t be fearful of the term. There are responsibilities and liability both the staffing firm and the client firm have, and in most cases there is some overlap. A classic example of how that overlap works in the client employer’s favor is workers’ compensation.

If I’m injured on the job as an employee, the workers’ compensation system is designed to give me an immediate remedy and benefit coverage for my injury. Workers’ compensation insurance is carried by the staffing firm that supplies the workers, and because of the co-employment relationship, the client will be protected from further damages in a lawsuit because the workers’ compensation system was designed to be the exclusive remedy for any of us when we are injured.

Safety training is another important area. In May 2014, ASA entered into a formal alliance agreement with the Occupational Safety and Health Administration (OSHA). The agreement codifies our industry’s commitment to workplace safety, to reducing the frequency of incidents and severity of injuries. The real lynchpin to reducing injuries is that we deeply engage the client organization to commit to workplace safety orientation and training, and where appropriate, [to ensuring the use of proper] personal protective equipment. Historically, some clients have tried to take the position that “They’re not our workers, they belong to the staffing firm.” OSHA doesn’t take that position. They will find that the staffing firm and the client are both liable for worker safety. And in most cases a higher degree of liability will be found against the client employer, because it’s their workplace. So, host employers and staffing firms are partners in safety. And every company should make that a priority. It means that during that worker’s first day on the job, a part of that day must be spent on safety training.

With worker classification, contract workers are statutory employees of the staffing firm. The staffing firm should be doing all of the proper withholding and payment of state and federal employment taxes, and covering the employee with workers’ compensation and unemployment insurance. There are cases, however, when staffing firms source independent contractors—people working independently who meet the criteria to be considered independent contractors. But in most cases, the workers supplied through staffing firms are W-2 employees. HR and the staffing firm need to be in alignment on this matter.

Another area for clients to focus on is EEO compliance. The basic concept is simple: Treat temporary employees exactly the same way you treat your permanent staff. Make sure your managers and co-workers understand these people have all of the rights afforded under the nation’s laws prohibiting discrimination. If discrimination occurs at a client worksite, the client will very likely be found liable. Another thing: Never ask a staffing firm to fill a discriminatory order, such as asking for younger workers or people of a certain ethnicity. The bottom line is that you may not discriminate or allow the discrimination of temporary workers to occur at your workplace.

Finally the ACA. There have been a lot of questions from clients about ACA compliance and their responsibilities and liability. HR departments should sleep well at night knowing that the staffing firm is the employer of record for the purpose of the ACA. Staffing firms have spent years developing ACA compliant programs.

SHRM Online: What are some myths about temporary or contract workers you’d like to dispel?

Wahlquist: One of the myths is that temporary and contract employees are mostly blue-collar or low-level office administrative workers and generally low-skilled or semi-skilled. And while that was never 100 percent true, it was truer in the 1940s. Staffing firms source and deploy talent across all white-collar occupations from accounting to the c-suite.

Myth No. 2 is that wages and benefits are not competitive. Staffing companies are recruiting from the same pool that all employers are recruiting from. And to get people to work for them, they have to pay competitive wages and benefits. And when skill-sets are in really high demand and short supply, it’s not unusual for staffing firm employees to make more than they could as traditional employees. Traditional employee benefits are also widely available to any staffing firm employees who wants or needs them. Then there is the myth that people who work for staffing firms do so because they can’t find traditional work. The fact is that most people choose to work at staffing firms to gain a bridge to a permanent job and work schedule flexibility. Staffing firms provide different types of employment opportunities to people of all stages of their lives and careers.

Finally, there’s the myth that working for a staffing firm will be seen as a detriment to employers looking at a resume. That just isn’t the case. What we find is that what employers are looking for is people who are industrious, with track records of success. When hiring managers see resumes with a series of contract assignments, with good references, temporary and contract employees are viewed no differently than other candidates. In fact, ASA data indicate that about one-third of workers on longer-term contract assignments get offered permanent work by the client. But only about two-thirds of those accept the employment. For others, working as a temporary or contract employee gives them more choices and options about how, when and where to engage in the new world of work.